The introduction of the first bitcoin ETFs in the United States last month has stirred up interest in crypto products among European investors and asset managers. Although partly a result of clearance by US regulators, Bitcoin, the dominant cryptocurrency, traded above $50K for the first time since December 2021.
On 11th January, eleven spot bitcoin ETFs that track underlying asset prices rather than future contracts were authorized by the Securities and Exchange Commission (SEC) in America. CoinShares, a digital asset investment firm, stated that these ETFs have attracted almost $3bn worth of assets under management from BlackRock, Fidelity Investments, Ark Invest, Invesco, and Franklin Templeton.
The SEC’s decision was a turning point in the cryptocurrency market because it marked a change that allowed bigger investors to buy bitcoin via regulated channels. The spot bitcoin ETFs also have lower fees and tracking errors than the futures-based ones.
European Crypto Products See Rising Demand
European asset managers have reported surges in inquiries and flow into their crypto products, which are structured as exchange-traded products (ETPs), following the US authorizations. ETPs are similar to ETFs, but they do not have the same regulatory standards and can be listed on different exchanges.
Regarding queries from European firms looking to invest in or launch crypto products, Hector McNeil (a co-founder of HANetf, which helps asset managers launch ETFs) has noticed a five-fold rise since January.
“Many are learning more, but all have had interest piqued, especially due to the US success,” he said.
According to ETFbook, a data platform, there are currently around $9.3bn in assets of crypto ETPs listed on Europe markets. It possesses $1.1bn of these assets which makes it the biggest one so far (ETC Group’s Physical Bitcoin ETC). Another WisdomTree’s crypto merchandise, VanEck, and 21Shares, also had substantial inflows during the last month, with three of their top sellers making just under $61m.
As for his company’s crypto line-up, Martijn Rozemuller, who is VanEck Europe CEO, observed that there is a strong rise in contacts with major continental financial institutions. The latter noted that this new asset type must be available to investors as long as it is regulated and transparent.
Crypto Adoption Milestone
Townsend Lansing, head of product at CoinShares, said the approval of spot bitcoin ETFs in the US represents an important milestone for bitcoin adoption among institutional investors. He said his firm has seen more interest from European clients on the back of the US decisions.
“We are seeing more interest on the back of the decisions to approve a US ETF on bitcoin,” said Lansing.
Some European asset managers have also responded to the rising demand by lowering their fees on their crypto products. For instance, WisdomTree, a provider of thematic and alternative ETPs, reduced charges on eight of its crypto ETPs last month, making them more competitive with the US spot bitcoin ETFs.
The US regulatory approval has refreshed enthusiasm for cryptos among the European institutional investors who have been mum since the start of 2023, according to Pierre Debru, WisdomTree’s head of quantitative research and multi-asset solutions.
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